Employment effects of CAP payments in the UK non-farm economy

Rizov, Marian and Davidova, Sophia and Bailey, Alastair (2018) Employment effects of CAP payments in the UK non-farm economy. European Review of Agricultural Economics, 45 (5). pp. 723-748. ISSN 0165-1587

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Abstract

This paper investigates the effects of the CAP payments on the indirectly generated non-farm jobs in small and medium-sized enterprises (SMEs), which are central to job creation. It examines whether there are differences in the effect according to business location - rural or urban, the agricultural supply chain, and according to CAP Pillars. A microeconomic approach is employed, based on firm data from FAME dataset combined with detailed subsidies information from DEFRA. The generalised method of moments (system GMM) is used to estimate the effect of CAP payments in both static and dynamic models of employment. The results suggest positive net spillovers of CAP payments to non-farm employment. Although the magnitude of the effect is small, it is economically significant. In general, Pillar 1 has a stronger positive employment effect relative to Pillar 2. However, Pillar 2 payments have a stronger positive effect per Euro spent in rural areas and within agricultural supply chain.

Keywords:CAP, non-farm employment, SMEs, spillovers, rural-urban, system GMM
Subjects:L Social studies > L112 Agricultural Economics
L Social studies > L140 Econometrics
L Social studies > L110 Applied Economics
Divisions:Lincoln International Business School
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ID Code:31361
Deposited On:16 Mar 2018 13:25

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